AGL Energy’s half-year results reveal a 15.3% revenue increase to $7.13 billion, but statutory profit plunges 83.2% to $97 million, reflecting margin pressures and significant provisions. The company declares a lower fully franked interim dividend of 23 cents per share.
- Revenue up 15.3% to $7.132 billion
- Statutory profit after tax down 83.2% to $97 million
- Underlying profit after tax declines 6.5% to $373 million
- Interim dividend cut to 23.0 cents, fully franked
- Capital expenditure surges to $667 million driven by growth projects and acquisitions
Financial Overview
AGL Energy Limited has released its half-year financial results for the period ended 31 December 2024, reporting a robust 15.3% increase in revenue to $7.132 billion. However, this top-line growth belies a sharp 83.2% decline in statutory profit after tax, which fell to $97 million from $576 million in the prior corresponding period. Underlying profit after tax, which excludes significant items and fair value adjustments, also declined by 6.5% to $373 million.
The company attributed the profit decline primarily to margin compression in consumer energy products, higher operating costs driven by inflation and maintenance, and increased provisions for onerous contracts. Notably, significant items totalling $245 million post-tax included increases in onerous contract provisions, retail transformation costs, and a $25 million legal penalty related to Australian Energy Regulator proceedings.
Operational Highlights
AGL’s total customer services grew modestly by 1.0% to 4.528 million, supported by gains in telecommunications and energy services, including the full consolidation of Ovo Energy Australia. Electricity sales volumes showed mixed trends: consumer electricity sales increased by 5.8%, while large business and wholesale volumes declined by 6.6% and 6.4% respectively. Gas sales volumes were broadly stable with a 1.5% increase overall, driven by strong growth in large business segments.
Wholesale electricity prices experienced heightened volatility across all states due to interconnector constraints, low renewable generation, and power station outages, contributing to increased generation at Bayswater Power Station and higher gas generation in South Australia. Fuel costs rose 13.3%, reflecting increased coal and gas prices and generation volumes.
Cost and Investment Dynamics
Operating costs excluding depreciation and amortisation increased by 3.2% to $905 million, influenced by inflationary pressures and higher maintenance expenses to sustain plant availability. Capital expenditure nearly doubled to $667 million, driven by sustaining investments in thermal power stations and growth capital focused on the Liddell Battery project, Energy as a Service initiatives, and acquisitions of Firm Power and Terrain Solar.
AGL’s net debt rose to $2.442 billion, up from $1.769 billion at June 2024, reflecting the cash outflows for capital projects and acquisitions. Consequently, gearing increased to 31.8%. The company maintained its Baa2 credit rating with Moody’s, supported by strong interest coverage and funds from operations to net debt ratios.
Strategic Developments and Outlook
In a strategic move, AGL completed a 20% investment in UK-based energy technology company Kaluza in January 2025 for AUD 151 million, signaling a continued focus on innovation and energy transition. The acquisition of Firm Power and Terrain Solar in September 2024 expands AGL’s renewable development pipeline and flexible generation capacity.
The interim dividend was declared at 23.0 cents per share, fully franked, down from 26.0 cents previously, reflecting the cautious stance amid profit pressures. The dividend reinvestment plan will not operate for this interim dividend.
AGL’s results underscore the challenges of navigating a complex energy market marked by volatile prices, regulatory scrutiny, and the ongoing transition to renewables. While revenue growth and customer base expansion are positive, margin pressures and increased costs highlight the need for continued operational efficiency and strategic investment.
Bottom Line?
AGL’s half-year results reveal the balancing act between growth and margin pressures as it accelerates its energy transition amid market volatility.
Questions in the middle?
- How will AGL manage margin compression amid rising competition and customer product switching?
- What impact will the acquisitions of Firm Power and Terrain Solar have on future earnings and capital requirements?
- How sustainable is the current dividend policy given the increased gearing and profit volatility?